Week Ahead starting 16/10/23: Tesla; Netflix; Goldman Sachs; Bank of America; United Airlines; US retail sales

(Video Transcript)

Get set for a big data week

AO: Hello, welcome to IGTV. I'm Angelina Ong, and this is your special look to the Week Ahead, starting 16 October 2023. Now, we've got a wall of earnings, especially after the United States banks kicked off their proceedings. And we've also got a lot of economic news.

Let's start off with Monday. We've got China trade balance figures from the Euro Zone and also the New York Empire State manufacturing data from the US.

And then on Tuesday, it's Australia out with minutes. This will be interesting after the Australian central banks did pat on interest rates, but left the door open to further hikes if inflation came roaring back.

Unemployment data, CPI, PPI from UK

The United Kingdom is out with unemployment numbers. ZEW from Germany will be interesting. And the key one to look out for from the US will be retail sales. Midweek, it's no less busy with China out with its third-quarter gross domestic product (GDP) growth rate. Retail sales numbers too there ahead of its singles day event.

And from the UK, look out for consumer price index (CPI) and producer price index (PPI), along with the retail price index as well. And the building sector, along with a Federal Reserve-based book, will be of interest from the US.

On Thursday, Japan's trade balance and house price numbers from China will be key from Asia. And we've also got the initial jobless claims and existing home sales from the US And we end the week with more data out of China. Loan prime rates there, consumer confidence figures, the most important out of the UK, along with retail sales.

We also have inflation data out of Japan and public sector net borrowing numbers from the UK. And look out for the Baker Hughesoil rig count too.

A market that can handle the volatility

Joining me now all the way from Chicago is Tom Sosnoff from tastylive, part of IG. Thank you so much for joining us.

We’ve seen such a huge amount of development, news and geopolitical tensions in the last week. What's fascinating, Tom, is it looks like you throw everything at the market and it seems unhinged from any of these events.

TS: It's unbelievable, isn't it? It's really a testament to what we call efficient market theory. And it's a testament to the market being able to normalise and almost commoditise everything. You know, when you think about it, you can go back in history decades, trading-wise, and geopolitical events used to create much more than 15 minutes or 30 minutes or three hours of nervousness, fear and disruption to the markets.

Now, this (conflict in the Middle East) is one of the worst human catastrophes we've seen in a long time, what happened last weekend. And basically, the markets were able to normalise within an overnight session.

So, I think you're right. I think that this is just an incredible phenomenon of just a lot of a lot of capital and efficient market theory, just kind of, you know, really normalising risk.

Trading the efficient market way

AO: So, Tom, how does one trade this efficient market theory and look for those volatility sparks?

TS: Well, the takeaway from it, because you can't look at something like geopolitical risk on a big, wide lens and say, ‘Oh, my God, this is the practical action I should take here.’ Or ‘This makes the most sense based on some macro or just some very wide lens.’

What you have to do is you have to recognise what the world is like that we're living in today, which means that you should do what you wanted to do to start with and just look for small pockets of emotion to create maybe a very small pricing opportunity that you're waiting for.

For example, the market opens down Sunday night or Monday morning by 30, 40, 50 handles in the S&Ps. And all of a sudden, you say, ‘OK, this is a good entry point for me because I wanted to get long anyway. And now the market has afforded me a very short-term window.’

This should take some of the outlier fear. A lot of people don't trade or don't like to invest because they're worried about risk they can't quantify. This sends a message to all investors and all traders that, ‘Hey, you know what, that stuff you're worried about, that risk that you can't quantify? Actually the market does it for you. So don't hold back. Do what you wanted to do in the first place and don't worry about things you can't control.’

AO: Wise words there from Tom Sosnoff from tastylive. We'll be checking in with you next week to find out more about where the markets are taking us with this efficiency theory.

US bank majors out with earnings

Now, let's move on to corporate news as well, because it is slammed in the coming week. We just had the big US banks out with earnings. But next week, take a look at what we've got on the schedule.

Rio Tinto out with three key operational numbers. Bellway, Bank of America, the next big bank to report. Goldman Sachs is also a key mover there. Johnson & Johnson and UNITED also out with third-quarter earnings.

The airlines will be, of course, particularly interesting given what's been happening out in the Middle East. Many of the US airlines and European ones as well starting to think about what to do with their flights to and from those regions after halting them following the developments over the last weekend.

Later on in the week, look out for Whitbread and Bellway. They're both out with earnings as well. A really interesting space, especially after Travis Perkins, the building supplier, came out with details earlier this week saying that demand remains very soft in the September month.

ASML just e-takeaway Netflix, Tesla, two of the big tech ones to look out for, and electric vehicles (EVs), of course, and Procter & Gamble out with first-quarter earnings. Later on in the week, we've got Deliveroo, Dunelm, Philip Morris International, AT&T and American Airlines to boot.

And we end the week with Plumage out with third-quarter earnings along with American Express. And that's your look ahead to the Week Ahead. I'm Angeline Ong. For more analysis, do follow me on Twitter @AngelineOng. This is IGTV.